Consideration

Question 1

What is consideration

Answer 1

It Is the idea that, in order to be able to hold the other party to a promise, you must have agreed to provide something in return

Question 2

What are the different forms of consideration

Answer 2

1. A promise which is called executory consideration.
2. An act which is executed consideration.

Question 3

Does consideration have to be adequateuh? and what constitutes as adequate

Answer 3

Abbdequacy is concerned with the amount or value of the something in return.

Consideration does not have to be adequate. The law is not concerned whether what is provided in return is of the same value as the promise for which it is given. It simply has to have some value. For example £1 payment for an Aston Martin would be sufficient

Question 4

Does consideration need to be sufficient and what constitutes as sufficient.

Answer 4

Sufficiency is concerned with the sort of thing it is.

What is provided in return must be the sort of thing the law regards as being apporitate subject matter for a bargain. For example money, good and services.

Question 5

Is performance of a public duty sufficient consideration?

Answer 5

Performance of a public duty is not regarded as sufficient consideration unless, unless that duty has been exceeded.

Question 6

Is a gracious act or a favour good consideration?

Answer 6

If what was done or promised was not done or promised in return for anything at all then no. This is known as past consideration.

If you look after your neighbour’s cat as a favour whilst they are on holiday and once they return they promise to give you £30. You would not be able to enforce that promise because you did not look after that cat in return for payment, £30 was promised afterwards.

Question 7

is past consideration good consideration.

Answer 7

No, unless:

1. The past act/promise was done at the promisor’s request.
2. There was was a mutal understanding between the parties that the act or promise would be compensated in some way.
3. Had the promise been made in advance it would have been legally forceable. This last condition often hinges on whether to not there would have been the necessary intention to create legal relations.

Question 8

Should the parties want to vary the contract, what would be needed to make the contract variation legally binding?

Answer 8

Just as you need agreement, consideration and intention to create legal relations to form a contactract, you need the same three things in order to make a contractual variation binding.

Question 9

What is the position on alterations to a contract to pay more?

Answer 9

The general rule is that simply performing an existing contractual duty owed to the other party will not be consideration in exchange for a promise by the other party to pay more.

UNLESS-

1. The party exceeds a contractual obligation owed to the other party in return for a promise of extra money, then there is clearly a detriment to the promisee and a benefit to the promisor; so it will be consideration for the promise of extra cash.
2. There is a practical benefit to one of the parties who is willing to pay the extra cash i.e avoiding liability under the compensation clause etc.

Question 10

If there is a practical benefit to the contract variation, what would that entail.

Answer 10

The the variation will be binding unless it can be shown that the party was subjected to duress.

Question 11

What is the position on alterations to a contract to pay less. For example in debt also known as the Pinnel Rule

Answer 11

At common law, unless there is some consideration for the concession, a debtor is at risk of the creditor changing their mind. The debtor must give the creditor something other than just part payment in return for the creditor promise to forgo the balance ( This is known as the Pinnel Rule)

This was also seen in Foakes v Beer- where it was held that because no new consideration had been given by Dr Foakes, to let write of the interest payments, Mrs Beer was entitled to change her mind and sue him for interest.

Question 12

What is the common law exception to the rule in Pinnel’s case.

Answer 12

The equitable doctrine of promissory estoppel. A creditor may be prevented from going back on a promise to accept part payment (even if the promise is not supported by consideration) if in all the circumstances it would be unfair for the creditor to do so.

Question 13

What is promissory Estoppel

Answer 13

If you have made a promise not to enforce your legal rights and someone has relied on that promise, even though they have not provided anything in return; then if you try to enforce your legal right, you will be prevented from going back on your promise, if it would be inequitable in all the circumstances to do so.

Question 14

What are the limitations to promissory estoppel.

Answer 14

1. It can only be used as a defence when a party brings action at common law to enfroce their legal rights.
2. There must have been a promise to waive strict legal rights.
3. The promisee must have acted on the promise but not necessarily to their detriment.
4. With ongoing payments such as rent, the doctrine operates to suspend the strict legal right, which means the creditor can resume their right to full payment going forward by giving reasonable notice. What credits cannot do is claim any back payments for concessionary period.
5. The party must have ‘clean hands’. So in a case where the debtor sought to take advantage of the creditors financial difficulties, the debtor was unable to use promissory estoppel as a defence